Proptech Weekly #49 – The Rental Revolution

The big news this morning was Robert May’s tweet commenting on the other big news:

“Agents will also be required to tuck tenants into bed and make sure they have a teddy or blankie!” Link

He is of course commenting on the impending ban of lettings agents charging fees to tenants.

Instead of wading into the topic – as everyone else invariably will be – I’d like to focus on this announcement being the catalyst of change.

First, some background:

Lettings Agents didn’t always charge tenants – indeed when I started out in 1999, the world of lettings and management was largely the same as it is today with the sole exception of fees: everyone charged 15% + VAT.

But we all know that’s a rarity today and most landlords have squeezed fees downward. In response, most agents have taken the Foxtons approach to recouping lost profit from tenants.

That in itself isn’t what bothers me: why has the level of service to tenants remained the same in the face of them paying more in both rent and agency fees?

“Recently tried to view some houses in West Sussex on a Saturday. Told by 1 agent they were too busy and the other still hasn’t called back. I am a defender of traditional estate agency but they will have a limited lifespan against online if this is the service they offer.” Link

There are certainly calls from tenants, lobbying groups, build-to-rent developers and even politicians for tenants to be treated better.

But what does better look like?

1. Know the people behind the property

If property is becoming a service, who owns and operates that property matters. And like any service, the opinion of past customers matters more.

Many have tried to create a Tripadvisor for landlords, and for many reasons they’ve struggled.

Movem however has over the last 3 years found a sweetspot: deliver better tenants to agents and landlords.

By allowing both sides to rate each other, and focusing on enabling more confident transactions, Movebubble now has a presence in most University towns across the UK.

The company has most recently been working with agencies to provide access to better tenants in a way agents can prove to their landlords they get better tenants – and therefore win more business. Genuine value add.

And of course the better agents quickly rise to the top of local renter consciousness as those are the ones who are happy for their tenants to provide feedback – and this is the important bit – that the agents genuinely act on to improve.

Over time Movem has amassed unique data to create trust.

2. Booking viewings conveniently

If you can expect a taxi in minutes, and receiving a delivered meal is only a few minutes more, why does it still take days to book a property viewing?

For all the talk, almost all agents – online and traditional – fail with the booking of viewings.

Negotiating time slots, not enough staff on hand to conduct viewings, not enough information about the property at the viewing, vendor/landlord being out or having tenants in who have their own schedule to be negotiated with.

Booking a viewing for property is at best an anxiety-inducing barrier and at worst an absolute nightmare.

It doesn’t need to be this way:

– Apply.Property are offering agents the ability to have tenants book viewings online quickly and in-sync with an agent’s calendar.

– Even better, Viewber can fill in the gaps where an agent cannot conduct the viewing themselves.

– And then there is Movebubble who currently take on negotiating a convenient viewing time and who are giving agents an app to mirror their tenant app, so that all viewings move from analogue processes like negotiating timings over the phone – which can’t be done at 10pm when your agency is closed. More on Movebubble later.

3. Professional landlords replacing amateur

While there is talk from build-to-rent providers about better service for tenants, giving them a cinema room and increasing the service charge isn’t better service.

Rentify are taking the novel approach of industrialising Guaranteed Rent.

That way they pay the landlord a fixed monthly rent at close to market price.

What it really means is they can control the tenant experience and ensure a level of service that far exceeds anything else out there, so that tenants recommend Rentify the way foodies recommend Deliveroo.

If people never leave the Rentify ecosystem, there’s value in that for landlords. And for the first time could put credence to the statement that tenants have choice – currently all agents behave roughly the same. Agents get painted with the same brush of the lowest common denominator, because they aren’t sufficiently different from the bad agents.

4. No more phantom listings

Searching for a place to rent is a game of chance.

It’s hard to see how this will ever change.

But the aforementioned Movebubble are trying to, like Rentify, build an ecosystem that is so much better that renters turn to them first, never go elsewhere and recommend it to their friends.

What is Movebubble?

– it’s an app for renters to find a property to rent
– they ‘curate’ a list of property based on a renter’s search history – if you rejected the property with a small living room, you’ll see fewer small living rooms going forward
– renters book viewings through the app and Movebubble either book the viewing manually with the agent (they have an army of people booking thousands of viewings a month)
– they now have an agent app to help automate booking viewings and also receiving offers from renters in a method not too dissimilar to Apply.property’s core features that are available to traditional agents currently.

Imagine not needing an administrator in the office to take calls, book viewings, conduct referencing and print off contracts – all these analogue tasks should have long been confined to history along with the fax machine.

That’s what the technologies above allow. But who will provide this better service?

Will it be traditional agents enabled by Apply.Property, Movem and Viewber?

Or will Movebubble provide a service so sticky that they quickly become the ‘Amazon Prime’ that aggregates the attention of renters?

Comments

Often it is the existing tenant that dictates when agent/prospective tenant can view – it is their home afterll! And now as agents we need express consent to enter their home, not a phone conversation but something tangible – email or text message. So we phone or email the current tenant who might reply when they get home from work or may need chasing again tomorrow and then we have to persuade them to confirm anappointment is okay in 2 days time between 10.00 and 10.30.

Personally, if someone wants to view I would like to be able to say yes, let’s go but in reality that rarely happens.

Who will provide a better service? IMO traditional agents who effectively employ technology – meaning they have the business process and company culture to continuously adapt and either develop better customer services or deliver the same quality with lower operational costs. Technology in itself is useless. It’s the wholistic service delivery that matters. Technology is only one part. AirBnB is a case in point. If you are a rubbish host you aren’t going to get any clients on AirBnB even if technology is good. MoveBubble also cancel viewing appointments and enquiry volumes are currently insignificant. Flatclub have been trailing demand side approach for years. But IMO tenant demand side strategy has limited potential. Amazon Prime reference is inappropriate. They operate in a world of endless supply of low price commodities. So demand side branding and loyalty management is critical. But our universe is governed by supply economics and tenants have no brand loyalty when they only purchase once every 2 years. They aren’t going to be loyal or choose low cost service A over higher priced high street service B in a world of no tenant fees. The channel is immaterial to them. They are going to choose the flat they want at a price they can afford. The only point at which the service provider becomes a differentiator is when the flat is in a multiple-listing and the tenant is willing to shop between those agents. Rarely happens. Most of the companies mentioned – MoveBubble, Moveem, Flatclub orginate out of the budget student niche market who place a higher value on low cost services and attracts those kind of tenants who can’t afford High Street Estate Agent fees. But in a world of no-fees well they can goto the Estate Agents now. But will the Landlords not prefer working professionals? Similarly low-cost self-service on-line agents will attract DIY budget landlords. But a tenant may also think a budget Landlord may not have the budget to carry out proper property repairs to their flat. Which is why we have not seen London Landlords flocking to low-cost “technology-led” online providers. Otherwise companies like uPad would have overtaken Foxtons years ago. It’s the old adage. You get what you pay for…..

Can’t but help post some personal insights on some of the suggestions/recommendations made in here….

Foxtons- firstly, them charging £350 + VAT to BOTH Landlords & Tenants for a contract has nothing to do about recouping ‘lost’ management fees as they currently charge 17% + VAT for this service (as do so many of the ‘prestige’ agents). That said, as a single branch independent we average 15.5% + VAT on managed instructions. Give good service, dont drop fees.

The fees discussion is not a national crisis its regional. Greedy Agents (and there are soooo many and they all know who they are) have caused this by charging fees simply because they could. This sits alongside their general attitude to Tenants which has remained largely unchanged in 50 years- you want it, we have it, you do whatever we say.

Anthony Payne’s comments related to Estate Agent viewings for sales not rental viewings and, as has already been contefsted in other articles, coming from a self-proclaimed ‘pro-agent’ supplier this came with no context. Did he only request this the day before? Was he flexible on his availability?

Whilst it may not be the optimum consumer experience the consumer is often far from always being right. Good applicants make the time to see a desirable property. If I have an applicant that calls in and says I want to see this property but only on this day at this time I know 99% certain that viewing will be a waste of time. The applicant that requests a time but is then happy to accomodate around agency commitments is the really serious applicant.

I dont think reviews have failed- by Landlords taking 10 mins they can collate reviews from google, facebook, allagents, renteragent, freeindex and many more. Usdually typing the agency name followed by reviews solves this issue quickly and gives plenty of insight.

Movebubble- they pitched to me last week and I dont remember anything in that pitch about ‘better tenants’. I also have no idea how on earth they would quantify this. My other issue is that, whilst a fab & slcik expereince for Tenants, this takes the agent out of the process. This is great for weak agents, but for good agents this takes away the individuality/personality of an agent and also removes the ability to fully register & vet an applicant BEFORE booking a viewing. This in itself is an art form and is a vital part of supplying good agency.

Viewber is an exciting opportunity but is as yet largely untested in the marketplace. Again, for quality agents, will an ‘ad hoc’ neg represent the company ethos, the various unique offerings and the conversion rates that experienced negs do.

Rentify have some plusses but are far from perfect. And your words ‘currently all agents behave roughly the same. Agents get painted with the same brush of the lowest common denominator, because they aren’t sufficiently different from the bad agents.’ is an appalling comment on the industry. There are plenty of agents out there doing some amazing things- it would just be nice to see some of these companies & intiatives championed in the way every single start-up appears to be at present as an apparent ‘agent crusher’.

It’s great to highlight PeropTech innovation, of which I am genuinely a strong advocate for, but increasingly the tone is about crushing the industry and destroying the current system. What is so often overlooking in so many of these articles is the indivisuality of agents out there. The different fees, service offerings, style, approach and staff. The fact that this is, still, like any service based sector a ‘people’ industry. Tech can be leveraged to enhance elements of our sector, drag it kicking and screaming in to the future, enhance transparency and much more however I genuinely beleive for this to be successful this is not about removing the people for autonomous platforms but it is about freeing up those people to deliver an enhanced experience. Less procedural and more experiental. Negs will become more like ‘Property Assistants’ than hard core sales staff.

Keep praising the PropTech features, elements and evolutions but forget/dismiss/put down agents in contrast at your peril and theirs.

The one thing I will pick up on is I don’t believe there’s any Proptech that is an ‘agent crusher’ – my remit is to highlight Proptech and you’ll often find me bemoaning the lack of innovation and/or ambition.

Always happy to incite a positive view of agency as a people business. 🙂